DOW Friday closing price - 12004

The bulls were successful in stopping the bleeding when the DOW made a new 12-week low but reversed to close in the green for the first time in the last 7 weeks. The correction may have found at least a temporary bottom at the 11865 level as the index has corrected a total of 9% from the highs seen the first week of May. With the next earnings report quarter starting in 3 weeks the bears may have opted to take profits and get on the sidelines awaiting further news. Probabilities now favor a sideways trading range for the next 3 weeks, perhaps with a slight upward bias to get rid of the oversold condition that presently exists as well as to retest the breakdown levels.

The bears failed to push the DOW to the next evident chart support at 11803 (stopped at 11865), suggesting that the selling was not as strong as it was previously believed to be. Some of this may have been due to news on Thursday that there would be economic support for the Greek government, which has been on the brink of default and had been one of the main reasons for the weakness over the last week. In addition, Friday's Initial Claims report came in slightly better than expected, reversing 5 weeks of higher unemployment claim numbers, suggesting that perhaps things may be changing.

On a weekly closing basis, resistance is minor to decent at 12391, and strong at 12810. On a daily closing basis, resistance is minor at 12078 and at 12124, minor to decent at 12383 and again at 12605. On a weekly closing basis, support is minor at 11951, decent at 11858/11893 and minor to decent at 11092/11100. On a daily closing basis, support is minor at 11897, minor again at 11823 and decent to strong at 11613.

The DOW has been on a clearly defined downtrend for the past 7 weeks and Friday's close did not negate that downtrend. Nonetheless, enough was done to the upside in the last 2 days of the week to believe that a pause in the selling may be occurring, likely awaiting further fundamental information. The rate of decline diminished and a trading range between 11700 and 12300 is the most likely scenario for the next 3 weeks.

The DOW did not accomplish anything special on Friday as the downtrend remains intact. No short-term buy signal was given though the bulls were able to show enough buying to suggest that further downside will be difficult to accomplish. Drops down to the 200-day MA, currently at 11740 remain viable. With the earnings report season starting in 3 weeks the probabilities suggest that a retest of the 100-day MA, currently at 12270, could be seen. On the weekly chart, though, rallies up to the 20-week MA as well as previous high of consequence, both at 12391 could also be seen, at least on an intra-day/intra-week basis. For that to occur, though, the index must first get above the 12120 level (most recent previous high) as well as close above 12076. If such a scenario occurs, rallies up to the levels mentioned will become probable.

As far as support is concerned, there is minor daily close support at 11952, minor again at 11897, and then minor to decent at the 200-day MA, currently at 11740. Intra-day drops down to the general support area at 11700 could be seen if the DOW starts heading back down and breaks below the weeks low at 11865. It should be mentioned that on a very short-term basis there is some minor but perhaps short-term important support at 11917. Important only from the point of view that a drop down to that level could be seen on Monday as a retest of the 11865 low seen earlier in the week. If the index does get down to that level and reverses to the upside to close in the green, the probabilities of the index getting back down to 11740 or even 11803 will be strongly reduced.

It is evident that the DOW is still very sensitive to news as neither the bulls nor the bears have a strong hold on the index right now. The biggest news out there right now is the Greek economic problem, which is at a boiling point right now with an 81% chance of default. Nonetheless, there were several reports last week by members of the IMF that stated that a bailout would occur. A resolution to that problem is likely to generate a short-term reaction of as much as 200 points in either direction. Other than that, there isn't a lot of economic news due out this week, with Durable Goods next Friday being the most important report this coming week. Even then, Durable Good is no more that a "B+" kind of report not likely to have an impact.

Probabilities now favor a slight upward bias for the next couple of weeks with 12300, or perhaps even as high as 12391 as the upside objective.

NASDAQ Friday closing price - 2616

The NASDAQ gave a sell signal on the daily and weekly closing chart, closing below the 200-day MA, currently at 2643, as well as below an important previous weekly closing low also at 2643. In this respect, the 2643 level will be an important indicator of what the traders think the market in general will do short-term, as a weekly close above that level or two daily closes in a row above that level will show up as a failure to follow through signal.

The NASDAQ was the index that received the most selling pressure this past week as several of the indexes' main stocks, such as AAPL and GOOG took on a lot of selling with AAPL closing below the 200-day MA as well and GOOG closing below the $500 level for the first time in 9 months. Both of these stocks will need to do some rallying this coming week in order to help the index negate the chart negatives generated this past week.

On a weekly closing basis, resistance is minor at 2643 and minor again at 2755. Above that level, there is minor resistance at 2789, decent at 2810 and at 2833, and decent to strong at 2873. On a daily closing basis, resistance is minor at 2643, minor to perhaps decent at 2678, and then nothing until decent resistance is found at 2755/2765. On a weekly closing basis, support is minor at 2596 and minor to decent between 2518 and 2530. On a daily closing basis, there is decent support at 2612 and then nothing until minor support is found between 2467 and 2496.

The NASDAQ is hanging by a thread as the weekly close support of consequence at 2643 has been broken and the decent daily close support at 2612 was broken intra-day on Friday with the index closing only a few points above closing at 2616. This means that any further weakness on Monday, or any day of the week, causing a close below 2612 would be another sell signal and would likely attract new technical selling. What is very worrisome is that a close below 2612 by at least 10 points would likely lead to a strong move down to the 2500 level as there is no previous intra-week support below 2603 until the 2500 level is reached.

Resistance above is also sparse in the NASDAQ as any rally above the intra-week high at 2678 would likely thrust the stock up to the 100 day MA, currently at 2765. In essence what you have in this index is a trading range between 2603 and 2678 that would be considered relatively uneventful but a break of any of those levels would likely generate a 90-100 point move in that direction.

Based on what was seen in the other indexes on Friday, the probability favors the upside but only by a slight margin and even then it is highly possible that even if the index rallies that the 2678 level will hold the rally down. Nonetheless, the index is certainly very fragile right now with the important support level at 2603 (2612 on a daily closing basis) so close by. Any negative catalyst could cause a domino effect to start that would likely pull the all the other indexes down.

It is important to note, though, that the $500 level in GOOG is a major psychological support level and though it was broken on Friday, the probabilities favor the stock rallying back up to that level the early part of the week. In addition, AAPL closed right at the 200-day MA, and it too should see somewhat of a bounce off of that line. Other large stocks in the index are also at levels where a small rally could be seen short-term, giving the bulls some reason for believing a small rally is about to occur.

Due to the close near the lows of the week and of the day on Friday, probabilities do favor the 2608 low seen this past week breaking, with 2603 as a viable objective. Should that level hold, short covering will likely be seen.

SPX Friday closing price - 1271

The SPX managed to generate a weekly green close on Friday but certainly not convincingly as the index only closed 1 point above last week's close. Nonetheless, the index did test successfully the 200-day MA, currently at 1258, on Thursday reversing to close in the green that day and following up with confirmation of the successful retest with a higher high and another green close on Friday. The action does suggest that no further downside below 1258 will be seen at this time and that the index will likely move higher during the next week or two.

The SPX is presently the index the traders are watching closely for clues as the most pressing negative out there at this time is in the financial arena with the possible Greek default looming over the market. A Greek default would affect banking institutions around the world and likely cause the heavily laden financial stocks index to fall strongly, causing a new and strong technical sell signal to be given.

On a weekly closing basis, resistance is very minor at 1279 and minor at 1293/1296. Above that level, resistance is decent at 1343 and decent to strong at 1363. On a daily closing basis, resistance is minor to decent at 1289, minor again at 1295 and 1299. Above that level, there is minor resistance at 1305 and decent at 1316.On a weekly closing basis, supports are all minor at 1239/1242, at 1189, and at 1166. On a daily closing basis, support is minor at 1265 and decent at 1256. Below that level, there is no support until minor support is found at 1178.

The SPX survived this past week when a possible solution to the Greek default problems was mentioned. Nonetheless, the index continues to find itself in a very precarious chart situation inasmuch as the daily close support at 1256 is "it". Below that level there is absolutely no support of consequence that can be depended upon to hold firm for another 200 points lower, other than the psychological support at 1200. Nonetheless, the index did survive the first attempt at breaking support this past week and unless there are new negatives over the weekend, further upside should be seen with the immediate objective being the 1294 to 1300 level.

If the Greek problem is resolved, the probabilities favor a technical retest of the 100-day MA, currently at 1316, over the next 2-3 weeks until the earnings report quarter starts. Support should now be found at 1265 and if that level is broken, the 200-day MA, now at 1259 would also offer decent support. Possible trading range for the week is 1268 to 1300, which was the same trading range seen 2 weeks ago, prior to last week's drop to 1258.

The bulls were able to survive the first skirmish at a battle zone of consequence, which is the 200-day MA in the SPX index. The possibility of a Greek default is still hanging over the marketplace but there are now some small indications that it might be averted. With no other economic reports of consequence due out until Friday, the possibilities of the market generating a small rally this week are high.

The next set of important economic reports are not due out until the first week of July, but even if they do come in worse than expected it is likely the traders will put off any aggressive selling until the earnings reports start coming out the second week of July. As such, the next 3 weeks are likely to be trading weeks in which the indexes will trade sideways with a slight bias to the upside trying to retest the break of the 100-day MA's right across the board. Simply stated, unless there is a strong world-wide negative catalyst over the next 3 weeks, the trading is likely to be technical in nature.

Some small weakness could be seen at the beginning of the week with the indexes likely testing this past week's lows, but not breaking them, followed by some gains throughout the week ending in another green close next Friday. Durable Goods is the only economic report of any consequence due out this week but it is not due to come out until Friday.